China builds 22 blockchain industrial parks – are there too many?

Yesterday, the “2019 China Blockchain Industrial Park Development Report” was released, revealing that as of May this year the nation has 22 such parks. It warns that, like Silicon Valley, there’s the risk of tunnel vision or homogenization.

The report details findings by the China Electronic Information Industry Development (CCID) research arm and InterChain Pulse.

The industrial parks mirror the Silicon Valley-style of office buildings or science parks, encouraging blockchain tech companies to rent out space often at subsidized rates. While 22 may seem like a lot, China is currently the leading nation in consumer fintech adoption.

InterChain Pulse and the CCID looked at the parks’ location, competitiveness, operation, and future prospects.

Along with the surprising number of developments, they found that 80% of the parks were built in under two years. Plus, over half of the parks are concentrated in the three major cities of Hangzhou, Guangzhou, and Shanghai.

This impressive growth was likely due to what the report refers to as the ‘troika’ – the three pillars of national policy, availability of capital, and a booming blockchain market. So far, the findings look promising for blockchain startups. However, as the report points out, this growth may lead to empty developments.

While blockchain-focused science parks in the three major cities are attracting investment, with an average occupancy of more than 60%, those more inland are not doing so well. Some are worryingly more than half empty and the report finds they are far less competitive. The publication outlines concerns that the gap between coastal and inland blockchain parks will grow.

Over 70% of the industrial parks rely on government subsidies to get by. One could interpret this in two ways. Either that the Chinese government is investing heavily in blockchain, which is promising, or that the parks must rely on external funds.

Yet more blockchain developments are planned, but the report warns that the parks need regional planning, so they are appropriately located; “most of the current blockchain industrial park enterprises are not ideal, and the vacancy rate is relatively high,” it reads.

Another warning from the report relates to homogenization. In recent years many have spoken about how homogenized Silicon Valley has become. Or how much group think there is. Similarly, the report points to the risk of a limited range of blockchain applications being explored. Some parks have themes such as exploring financial applications, government affairs or traceability.

However, other parks are engaging local businesses or pursuing distinctive development routes.